Your Financial Survival Guide - Things You Need To Do Now

Now is a good time to take a look at your financial situation and take any steps necessary to ensure your financial health and long-term prosperity. Here are the key aspects of your financial life that you need to make sure are in order. - Have a Savings Plan - You should be saving in a systematic fashion. If you aren't, start saving now, regardless of the form or amount. Even if you don't think you can afford to put away much or are just start starting out with a savings/checking account at your local bank for five dollars a week, there is no time like the present to do it. A little is always better than nothing at all. Just to review the typical options open to you: Your 401k plan at work (if you have one). The rule is to save at least the amount that is matched by your employer. If they match 2% of your salary, then save at least that. Of course, it is best to max the amount saved to the plan limit, which can be no more than $16.5K per law but may be lower as set by you company's plan. An IRA, whether traditional or a Roth IRA, is another tax deferred vehicle open to you, which you can have in addition or instead of any 401k contributions. Of course, you should make sure you have a 6-12 month emergency cash fund. If not you may want to emphasize regular savings over tax deferred savings that cannot be touched without a penalty. For more information please go to the Retirement Planning section. - Create a Budget - and live within the budget. Carefully consider what you truly need in your life (in a financial sense). Make a list and make sure your total expenses are less than your take home pay after savings. Make sure your monthly expenses are properly aligned with your income. If not you must change your situation. Most people can lower their expenses to be lower than their income if they are truly motivated. If not, it's often a temporary situation that can be alleviated by changes in employment or lifestyle in the mid-term. For more information please go to the Budgeting section. - Make sure your Credit and debt situation is in order. First check your credit report and FICO score. This should be done once a year. Make sure there are no debts or credit lines showing for which you are not responsible. Make sure all of the indications of payment timeliness are accurate. If they are not accurate, contact the appropriate credit reporting agency and inform them of the mistake. This can be done online and over the phone. They should be able to correct within a few months. If necessary, begin to take actions that will improve your FICO/credit score. This includes paying down your debt if necessary. In many cases this should take priority over having an investment plan, as you may be paying much more in interest on your credit cards than you are earning on your investments. Ideally, you would not want to have a debt to total credit limit ratio of more than 35%. That is, of you have a total credit limit on all of your credit cards of $10,000, you should not have total credit card debt of more than $3,500. If you are above this percent you should establish a personal plan to steadily lower your debt. For more information please go to this Credit Cards article. - Have an Investment plan. In addition to saving in a tax-deferred account, you should have an overall investment plan, if you have the funds to spare. Ideally, you want to invest money in addition to what you have saved through your 401K, etc. You'll want to have investments that are more liquid than a tax deferred account. Your investment plan should define how much money per period should be put into investments in total. It should breakdown what percent of your investments should go into various types vehicles - asset allocation - how much in growth stocks, how much income stocks, how much in bonds, real estate and commodities. You should evaluate, adjust and stick to this investment plan over the year. For more information please go to the Investments section.